Zimbabwe prices likely to remain high unless government avails forex

Zimbabwe poultry industry was negatively affected by an avian influenza outbreak in the middle of the year causing low production of meat and eggs in the country.

“The other prices that were incurred were in the poultry and eggs due to the avian flu,” Jabangwe said.

However, due to demand, red meat has attracted higher prices.

The country also relies heavily on imports due to undercapitalised local manufacturers which import raw materials.

“Too many factors have caused the prices increases but l will focus on the main one which is the issue of foreign currency shortages; where manufacturers and suppliers buy foreign currency from the black market. lt is not a sustainable model; the foreign currency must be acquired through formal channels,” Confederation of Zimbabwe Retailers president Denford Mutashu.

Importing requires local firms to be well oiled with foreign currency and Reserve Bank of Zimbabwe allocated $600 million in October under nostro stabilisation to cushion procurement of critical raw materials by manufacturers.

Local manufactures cannot meet the country’s demand, though government has introduced some measures like statutory instrument SI 122 of 2017 to restrict importation of finished products.

However local retailers have foreign products with some having three tier prices.

The Zimbabwean bond notes and mobile dollar are valued differently in the black market and products also have different prices with mobile dollar being unfavourable. Retailers favour cash which enables them to import their stock.

The economic experts say that the availability of forex will lower the commodity prices.

“We do not see the prices increasing but we see them stabilising for now if the $1.5 billion (African Export-Import Bank loan) comes in. The currency will have the correct rate being allocated and also by March when the auction floors open will have more flows coming,” said Jabangwe.

The southern African nation earns forex from tobacco and minerals exports. Tobacco exports stood at $898.9 million as at December 13 and the next auction floors are expected to be opened between February and March next year.

“We also need to agree that we do not arrest the forex dealers but what we do is addressing the fundamentals by making sure we try to stabilise our nostro accounts. We must commission that land audit president Emmerson Mnangagwa have spoken about in his inauguration. It has to be facilitated otherwise the country will continue facing inflationary challenges because output from farming is especially very low,” said Zimbabwe National Chamber of Commerce chief executive Christopher Mugaga.

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